DoT Gives Nod To Idea-Vodafone Merger

The Department of Telecommunications has given conditional approval to the merger of Vodafone India with Idea Cellular, where it has sought over Rs 7,200 crore from both companies on account of one-time spectrum charges and spectrum liberalisation fees.

DoT has sought a bank guarantee of more than Rs 3,300 crore from Idea Cellular for its OTSC and Rs 3,900 crore from Vodafone India, the market price of administrative spectrum less than 4.4 MHz that was given to the No 2 carrier when it began operations. Sources aware of the development said that the approval, which has been given with riders, will come into effect only once the companies pay up their respective amounts.

“Once the companies pay up, department will begin the transfer of Vodafone India’s licenses to Idea Cellular, which will complete the merger,” a senior official said, asking not to be named.

The government’s move will clears the last hurdle to create the country’s largest and one of the world’s largest carriers by customers, one that will be better placed to fight out new entrant Reliance Jio’s and current market leader Bharti Airtel.

The largest ever merger in the Indian telecoms sector, between the present No 2 carrier Vodafone India and No 3 carrier Idea Cellular, will create a company with Rs 63,000 crore of revenue, 39% customer market share and nearly 42% revenue market share, across India.

The approval, which comes more than a year after the KM Birla owned carrier and Vodafone Group’s India arm had announced their intent to merge, would also prove to be a feather in the government’s cap which has been pushing for ease of doing business. The conditional approval also comes after ET’s report that the Prime Minister’s Office had sought details of the merger of the No 2 and No 3 carriers, which had been pending with DoT for some months now.

Both Idea and Vodafone had earlier said that the merger will be completed by June end, after which the combined entity will begin working as a single entity – Vodafone Idea Limited. However, with DoT seeking two rounds of legal opinion on the charges that both companies need to pay, the process got delayed, and so did the approval. Source : economictimes